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HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

HM Revenue & Customs
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Schedule 4 Company Share Option Plan (CSOP): Eligibility of individuals to participate: The employment requirement: Nominees

Although options must not be transferable, it may, in principle, be accepted that Schedule 4 CSOP schemes which provide for shares acquired by option exercise to be registered in the name of a nominee. Such provisions can be useful when cashless exercise procedures are used to facilitate tax withholding or payment for the shares.

An option-holder becomes the beneficial owner of the shares as soon as the option is exercised, even if arrangements are immediately implemented so that the legal ownership of the shares passes to a nominee. Subsequent disposal of the beneficial ownership of the shares will be a chargeable occasion for capital gains tax purposes.

For Schedule 4 CSOP schemes which provide scope for registering shares in the names of nominees, scheme organisers should, for the avoidance of doubt, ensure that the scheme documents make it clear that, if shares are to be registered in the name of a nominee, the option-holder who exercised the option remains the beneficial owner of the shares.